ANA surprise: Agencies invited as full members

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The Association of National Advertisers last week voted to invite ad agencies to join as full members, a move that already is opening a rift between two of the country's most powerful ad trade associations.

Announced at the opening Oct. 9 session of ANA's 89th annual meeting in Naples, Fla., the decision blindsided the American Association of Advertising Agencies.

O. Burtch Drake, president-CEO of the Four A's, was informed of the ANA's decision by letter only minutes before it was announced, and learned details of the plan by attending a press briefing that followed the announcement. Mr. Drake earlier this year had proposed the idea of a joint ANA/Four A's annual meeting at his group's own conference in April, an idea rebuffed by ANA President-CEO John Sarsen.

MEMBERS CAME FIRST

Mr. Sarsen said the association wanted to inform members first and did not approach the Four A's beforehand because "we're not asking them to join."

ANA did approach some agencies prior to the announcement for feedback, however; its presentation of the plan included an endorsement from Ogilvy & Mather Worldwide CEO Shelly Lazarus.

"We did talk to some select friends to get guidance," said Mr. Sarsen.

Agency executives attending the conference responded enthusiastically to the invitation to join, saying it reflected marketers' view that agencies are important partners in building brands and not just vendors.

"It's a real positive sign," said Pat McGrath, chairman-CEO at Jordan McGrath Case & Partners, New York, and chairman of the Four A's. Added Lou Schultz, vice chairman of Campbell-Ewald, Warren, Mich.: "They've said we can come to dinner. We would be foolish not to consider it."

Indeed, Mr. Drake in a formal statement said that "any initiative that will allow agencies to get closer to clients is welcomed."

HARMONY INCLUDES `HEADS-UP'

But in a separate interview, he said he was "surprised" by the ANA announcement and hoped it would not "destroy the harmony" he said has trad-itionally existed among all the trade groups. That harmony includes giving each other "a heads-up" on plans that impact

Mr. Drake also warned the ANA to "stay off our turf," saying there are issues such as agency compensation where advertisers and agencies are often at odds.

Mr. Sarsen insisted the broadening of the membership was not meant to put ANA into competition with the Four A's or another leading industry group, the American Advertising Federation.

"Our objective will not be things like how to run an ad agency," he said.

New ANA Chairman John H. Costello, senior exec VP-general manager of marketing at Sears, Roebuck & Co., added: "We felt on the large majority of issues we essentially have the same goals."

MERGER PRESSURES

Several executives said the move could put pressure on the trade groups to consider an alliance or even a merger of some operations.

"There has to be consolidation in this industry," said Mr. Schultz. "There are too many different organizations trying to do the same thing."

The Four A's and ANA "have to look at the ways to intelligently combine their resources," agreed F. Stone Roberts, chairman-CEO of ad agency Gotham, New York.

Both Messrs. Sarsen and Drake said a merger was unlikely.

ANA executives said the membership move was not a bid to increase revenue.

"It was not financially driven," said Ron Cox, group VP-marketing at Wm. Wrigley Jr. Co. and an ANA board member. "This is a capability-driven strategy."

Although full details have yet to be worked out, Mr. Sarsen said agencies that join ANA will pay dues probably based on billings that will be comparable to those paid by advertiser members.

DEFINING `MAJOR' AGENCIES

ANA said it will invite "major" agencies to join; that definition is not limited to large agencies, it said, but will include agencies specializing in disciplines such as interactive media or multicultural marketing.

Mr. Drake said he thinks it "will be hard for agencies to say no" to joining ANA. "I suspect there'll be pressure [from clients] to do so."

One obvious Four A's concern is that some agencies, especially smaller ones, will not be able to afford to pay dues to both trade associations.

ANA executives said they have not addressed the issue of eventually expanding membership ranks to include media companies or management consultants.

BOOSTING HORSEPOWER

"This will bring more horsepower into the organization. When we speak in Washington or New York, we will have a more balanced point of view," said Denis Beausejour, VP-advertising at Procter & Gamble Co., referring to the addition of agency members to ANA.

Media members could be a possibility, he said, although "I'm not sure their interests are as aligned."

Other leading marketing executives also reacted positively to the change, which the ANA said was unanimously approved by its board and members.

"It's a smart move. We have a lot of common ground," said Frank Bifulco, VP-marketing, Coca-Cola USA.

Wally Snyder, president-CEO of AAF, whose membership includes advertisers, agencies and media companies, said he also was not informed of the move in advance.

"It's important we not duplicate each other," he said, although he didn't think AAF will be affected by the Four A's move.

Copyright October 1998, Crain Communications Inc.

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